Audi foresees sizeable drop in annual volumes due to GST-cess

German luxury carmaker Audi, which has completed 10 years in India, is among the luxury carmakers which will be sizeably impacted by the new additional GST-cess.

The company, which saw its sales volume dropping to 7,800 cars in 2016 from 11,192 cars in 2015, was hopeful the original GST tax introduced on July 1,2017 would help accelerate sales, but the proposed new additional cess announced recently will have an adverse impact.

The company expects the cess to impact its sales volumes in double digits, Rahil Ansari, head of Audi India, said, “Customers of luxury cars are price-sensitive too. Audi A3 and Q3 buyers are mostly first-time luxury car buyers, they are price-sensitive and a difference of few lakh rupees is not something they will be really comfortable with. The Indian luxury car market is no longer a emerging market, it is a matured market.” 

Expanding its petrol, alternative technology portfolio

The company that had 90 percent of diesel-powered cars and 10 percent petrol-powered cars in offering three years back, has improved this ratio to 70 percent diesel and 30 percent petrol offering. 

As per its global strategy, by the year 2020, it aims to improve this ratio to 50 percent diesel and 50 percent petrol or alternative fuel technology.

Speaking at the launch of its flagship seven-seater SUV, the Q7, in Mumbdai today, Rahil Ansari, head, Audi India, said: “We have improved the mix in our product offerings (diesel and petrol). By 2020, we will have 50 percent diesel-powered cars and 50 percent petrol or alternate fuel based cars. We are optimistic about India’s goal for having a fleet of all-electric vehicles by 2032. We haven’t seen any clear roadmap that would enable introduction of EVs feasible. Till the necessary infrastructure for EVs is not present, wherein our customer can travel anywhere in the country with access to charging stations, we do not foresee introduction of our EV in India.” 

Going slow on India network expansion
Audi India has an existing network of 41 service points, 40 showrooms and nine Audi-approved plus (pre-owned Audi certified car) showrooms. The company had earlier planned to increase the total to 100 touch-points by end of this year.

With the recent announcement of the additional GST cess, the company is putting the brakes on its network expansion and  planned to reach 95 touch-points this year. 

“In 2019, there won't be much of expansion for the company in India. It all depends on the sales volumes, it does not make sense for investing in dealership network if there is no sales volume,” said Ansari. 

Commenting on the business plans for India, while speaking to Autocar Professional, Ansari said, “We will see the impact and then decide our course of action. We will not react prematurely, but because of the impact we will definitely need to adjust our business plans. As of now though, it is too early to comment.”